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From Kirsten Bischoff, Opalesque New York:

According to research firm Cerulli, investors are reallocating to alternative investments. This is good news for established managers who spent 2009 getting their “bullets” back and for new managers who focused on running internal assets. There is a growing anticipation that the next few quarters hold the promise of seeing a significant portion of “sidelined cash” return to the hedge fund industry.

But as much as investors fear missing the initial bounce of a market recovery, there remains a public relations challenge from the poor performance and illiquidity of 2008 and early 2009.

Much time and energy has been focused on how to appeal to this returning investor base and managers have done everything from restructuring fees to providing new and previously unheard of levels of transparency.

Private equity firm Cornwall Investments is betting that hedge fund managers will turn to professional marketing firms to help construct an appealing story for investors, and has taken a minority stake in NJ-based hedge fund consultancy Emerging Manager.

Paul Eckel, founder and chief executive of Emerging Manager, LLC told Opalesque that the outlook for both managers and investors in the hedge fund space is very positive. He cites very strong performance in 2009 as one of the most important accomplishments for managers looking to woo investors back to hedge funds. Fo......................

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